Avnet Inc 10-Q for FY2023 Q3

Avnet Inc (AVT)

10-Q 2023-05-05 For: 2023-04-01

Added on April 09, 2026

About this 10-Q

Avnet Inc filed this 10-Q on May 5, 2023, covering the quarter ended April 1, 2023 (FY2023 Q3).

Headline figures

Quarter ended April 1, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $6.51B; up 0.4% from $6.49B a year earlier
Net income: $187.43M; up 2.2% from net income of $183.42M a year earlier
Diluted EPS: $2.03; up 10.3% from $1.84 a year earlier

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____


New York				11-1890605
(State or other jurisdiction				(IRS Employer
of incorporation or organization)				Identification No.)


2211 South 47th Street, Phoenix, Arizona		85034
(Address of principal executive offices)		(Zip Code)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which registered:
Common stock, par value $1.00 per share	AVT	Nasdaq Global Select Market

Large Accelerated Filer ☑		Accelerated Filer ☐
Non-accelerated Filer ☐		Smaller Reporting Company ☐
Emerging Growth Company ☐

	Page No.
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets at April 1, 2023 and July 2, 2022	2

Consolidated Statements of Operations for the third quarters and nine months ended April 1, 2023 and April 2, 2022	3

Consolidated Statements of Comprehensive Income for the third quarters and nine months ended April 1, 2023 and April 2, 2022	4

Consolidated Statements of Shareholders’ Equity for the third quarters and nine months ended April 1, 2023 and April 2, 2022	5

Consolidated Statements of Cash Flows for the nine months ended April 1, 2023 and April 2, 2022	6

Notes to Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3. Quantitative and Qualitative Disclosures About Market Risk	24

Item 4. Controls and Procedures	24

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	25

Item 1A. Risk Factors	25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 6. Exhibits	26

Signature Page	27


	April 1,		July 2,
	2023		2022

	(Thousands, except share
	amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	185,937	$	153,693
Receivables		4,670,636		4,301,002
Inventories		5,354,009		4,244,148
Prepaid and other current assets		232,956		177,783
Total current assets		10,443,538		8,876,626
Property, plant and equipment, net		400,320		315,204
Goodwill		770,906		758,833
Operating lease assets		222,852		227,138
Other assets		271,694		210,731
Total assets	$	12,109,310	$	10,388,532
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	76,335	$	174,422
Accounts payable		3,136,862		3,431,683
Accrued expenses and other		704,684		591,020
Short-term operating lease liabilities		51,869		54,529
Total current liabilities		3,969,750		4,251,654
Long-term debt		3,032,864		1,437,400
Long-term operating lease liabilities		192,519		199,418
Other liabilities		278,576		307,300
Total liabilities		7,473,709		6,195,772
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock $1.00 par; authorized 300,000,000 shares; issued 91,414,383 shares and 95,701,630 shares, respectively		91,414		95,702
Additional paid-in capital		1,678,673		1,656,907
Retained earnings		3,249,912		2,921,399
Accumulated other comprehensive loss		(384,398)		(481,248)
Total shareholders’ equity		4,635,601		4,192,760
Total liabilities and shareholders’ equity	$	12,109,310	$	10,388,532


	Third Quarters Ended				Nine Months Ended
	April 1,		April 2,		April 1,		April 2,
	2023		2022		2023		2022

	(Thousands, except per share amounts)
Sales	$	6,514,619	$	6,488,143	$	19,982,273	$	17,938,055
Cost of sales		5,702,771		5,675,110		17,618,151		15,752,295
Gross profit		811,848		813,033		2,364,122		2,185,760
Selling, general and administrative expenses		498,219		512,364		1,460,984		1,499,904
Russian-Ukraine conflict related expenses		—		26,261		—		26,261
Restructuring, integration and other expenses		—		—		—		5,272
Operating income		313,629		274,408		903,138		654,323
Other income (expense), net		1,653		(469)		3,452		858
Interest and other financing expenses, net		(71,695)		(25,914)		(175,813)		(70,388)
Gain on legal settlements (Note 7)		—		—		61,705		—
Income before taxes		243,587		248,025		792,482		584,793
Income tax expense		56,161		64,608		176,910		139,237
Net income	$	187,426	$	183,417	$	615,572	$	445,556

Earnings per share:
Basic	$	2.05	$	1.86	$	6.67	$	4.50
Diluted	$	2.03	$	1.84	$	6.58	$	4.44

Shares used to compute earnings per share:
Basic		91,436		98,659		92,226		99,113
Diluted		92,456		99,486		93,616		100,296
Cash dividends paid per common share	$	0.29	$	0.26	$	0.87	$	0.74


									Accumulated
	Common		Common		Additional				Other		Total
	Stock-		Stock-		Paid-In		Retained		Comprehensive		Shareholders’
	Shares		Amount		Capital		Earnings		(Loss) Income		Equity

	(Thousands)
Balance, July 2, 2022		95,702	$	95,702	$	1,656,907	$	2,921,399	$	(481,248)	$	4,192,760
Net income		—		—		—		184,261		—		184,261
Other comprehensive loss		—		—		—		—		(191,797)		(191,797)
Cash dividends		—		—		—		(26,998)		—		(26,998)
Repurchases of common stock		(3,445)		(3,445)		—		(144,457)		—		(147,902)
Stock-based compensation		72		72		8,939		—		—		9,011
Balance, October 1, 2022		92,329		92,329		1,665,846		2,934,205		(673,045)		4,019,335
Net income		—		—		—		243,886		—		243,886
Other comprehensive income		—		—		—		—		243,585		243,585
Cash dividends		—		—		—		(26,307)		—		(26,307)
Repurchases of common stock		(1,629)		(1,629)		—		(62,795)		—		(64,424)
Stock-based compensation		35		35		13,553		—		—		13,588
Balance, December 31, 2022		90,735		90,735		1,679,399		3,088,989		(429,460)		4,429,663
Net income		—		—		—		187,426		—		187,426
Other comprehensive income		—		—		—		—		45,062		45,062
Cash dividends		—		—		—		(26,503)		—		(26,503)
Stock-based compensation		679		679		(726)		—		—		(47)
Balance, April 1, 2023		91,414	$	91,414	$	1,678,673	$	3,249,912	$	(384,398)	$	4,635,601


	Electronic
	Components		Farnell		Total

	(Thousands)
Carrying value at July 2, 2022 ⁽¹⁾	$	291,526	$	467,307	$	758,833
Foreign currency translation		4,134		7,939		12,073
Carrying value at April 1, 2023 ⁽¹⁾	$	295,660	$	475,246	$	770,906


Fiscal Year
Remainder of fiscal 2023	$	17,356
2024		55,302
2025		44,128
2026		34,699
2027		22,835
Thereafter		116,335
Total future operating lease payments		290,655
Total imputed interest on operating lease liabilities		(46,267)
Total operating lease liabilities	$	244,388


	Quarter Ended				Nine Months Ended
			Sales				Sales
			Year-Year %				Year-Year %
	Sales		Change in		Sales		Change in
	Year-Year		Constant		Year-Year		Constant
	% Change		Currency		% Change		Currency
Avnet	0.4	%	3.4	%	11.4	%	17.1	%
Avnet by region
Americas	5.4	%	5.4	%	18.6	%	18.6	%
EMEA	9.5		15.4		17.4		30.6
Asia	(10.1)		(8.0)		3.1		6.1
Avnet by operating group
EC	0.7	%	3.5	%	12.8	%	18.4	%
Farnell	(3.0)		1.4		(5.6)		1.0

Exhibit
Number		Exhibit

4.1		Form of Officers’ Certificate setting forth the terms of the 6.25% Notes due 2028 (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 8, 2023).

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.

*	Filed herewith.
**	Furnished herewith. The information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section, and shall not be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

	AVNET, INC.


	By:	/s/ KENNETH A. JACOBSON
		Kenneth A. Jacobson
		Chief Financial Officer


	Nine Months Ended
	April 1,		April 2,
	2023		2022

	(Thousands)
Cash flows from operating activities:
Net income	$	615,572	$	445,556

Non-cash and other reconciling items:
Depreciation		59,870		65,719
Amortization		5,169		12,034
Amortization of operating lease assets		39,962		40,298
Deferred income taxes		(11,053)		1,423
Stock-based compensation		30,057		28,638
Other, net		7,986		47,667
Changes in (net of effects from businesses acquired and divested):
Receivables		(320,097)		(880,957)
Inventories		(1,033,381)		(549,999)
Accounts payable		(331,352)		628,822
Accrued expenses and other, net		(10,974)		141,381
Net cash flows used for operating activities		(948,241)		(19,418)

Cash flows from financing activities:
Issuance of notes, net of discounts		498,615		—
Borrowings under accounts receivable securitization, net		261,000		57,400
Borrowings under senior unsecured credit facility, net		763,991		—
Borrowings (repayments) under bank credit facilities and other debt, net		(90,256)		117,982
Repurchases of common stock		(221,282)		(88,952)
Dividends paid on common stock		(79,807)		(73,253)
Other, net		(9,814)		(16,853)
Net cash flows provided by (used for) financing activities		1,122,447		(3,676)

Cash flows from investing activities:
Purchases of property, plant and equipment		(137,804)		(33,679)
Proceeds from liquidation of Company owned life insurance policies		—		84,343
Other, net		(16,326)		724
Net cash flows (used) provided by investing activities		(154,130)		51,388

Effect of currency exchange rate changes on cash and cash equivalents		12,168		(28,528)


	April 1,		April 2,
	2023		2022

	(Thousands)
Balance at beginning of the period	$	113,902	$	88,160
Credit Loss Provisions		9,079		21,746
Russian-Ukraine conflict Credit Loss Provisions		—		17,202
Credit Loss Recoveries		(140)		(300)
Receivables Write Offs		(14,868)		(9,194)
Foreign Currency Effect and Other		2,249		(2,623)
Balance at end of the period	$	110,222	$	114,991


	April 1,		July 2,		April 1,		July 2,
	2023		2022		2023		2022

	Interest Rate				Carrying Balance
Revolving credit facilities:
Accounts receivable securitization program (due December 2024)	5.65	%	2.55	%	$	558,800	$	297,800
Credit Facility (due August 2027)	4.61	%	—			838,629		—
Public notes due:
April 2026	4.63	%	4.63	%		550,000		550,000
May 2031	3.00	%	3.00	%		300,000		300,000
June 2032	5.50	%	5.50	%		300,000		300,000
March 2028	6.25	%	—			500,000		—
Long-term debt before discount and debt issuance costs						3,047,429		1,447,800
Discount and debt issuance costs – unamortized						(14,565)		(10,400)
Long-term debt					$	3,032,864	$	1,437,400


	Nine Months Ended
	April 1,		April 2,
	2023		2022
Operating Lease Term and Discount Rate
Weighted-average remaining lease term in years	8.4		8.8
Weighted-average discount rate	3.8	%	3.8	%


	/s/ PHILIP R. GALLAGHER
	Philip R. Gallagher
	Chief Executive Officer


	/s/ KENNETH A. JACOBSON
	Kenneth A. Jacobson
	Chief Financial Officer